Russia, Turkey and Venezuela Downgraded
In reaction to recent changes in the political and social realities that impact corporate activity, Coface has announced three major downgrades.
The country assessment for Russia is downgraded to C. The Ukrainian crisis has certainly had a negative impact on growth (forecast at 0% in 2014), principally due to the fall in investments and deceleration in consumption. Moreover, investment difficulties were already perceptible in 2013 and illustrate the Russian market’s lack of confidence in the business climate. The large outflows of capital from Russia since 2008 are testament to this. Also taken into account is the fact that Russian companies are massively indebted in terms of currencies. With limited access to markets due to the current sanctions and some affected by the fall in the trouble, companies are facing major repayment deadlines in a year from now.
Turkey’s assessment has been downgraded to B. While the economic activity in Turkey is showing a certain resilience (3.3% forecast in 2014), on the corporate side, foreign debt remains high, which increases exposure to foreign exchange risk. The lira has proven to be very volatile, and Coface’s payment experience with Turkish companies has sharply deteriorated. On a political level, growing tensions on the country’s borders are likely to affect internal stability.
Venezuela is now placed in D category. The country has sunk into recession (-2.5%) and hyperinflation (64% in 2014), fuelled by a shortage of goods and against the backdrop of political and social tensions. The risk of nationalization and, above all, the rationing of imports and control of prices and margins, have cast a shadow over a very difficult business environment for companies.
Coface Country Risk Assessments measure the average risk of non-payment by companies in a country in the context of their short term commercial transactions. Sovereign debt is not included. In forming the assessment, Coface brings together the economic, political and finan-cial outlooks for the country, Coface’s payment experience and the business environment of the country. The country risk assessments are based on a scale with 7 levels: A1, A2, A3, A4, B, C, and D and can be combined with watch categories.
Assessments either upgraded or removed from negative watch list or placed on positive watch list

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